Privatizing government facilities

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The Chicago Tribune editorially endorses the effort underway by Mayor Daley to lease public facilities to private operators:

Mayor Richard Daley pulled off a coup in 2004 when a Spanish—Australian consortium agreed to pay $1.83 billion to lease and operate the Chicago Skyway into the next century. Now Daley is exploring a sequel. Maybe sequels. His administration is looking into leasing part or all of Midway airport to private business. City—owned harbors, parking lots and waste—sorting and transfer stations might also be ripe for leasing. Daley allies in Springfield are moving legislation to smooth such deals by making sure Midway and the other public facilities remain exempt from property taxes if private interests take over.

Notice that a foreign—owned company was involved in this transaction? In the realm of large scale enterprises like airports, private tollways, and many other civil engineering achievements, most of the experience is overseas.

Airports are an example. Widely admired airports have spun off consulting and even operating companies to run overseas airport facilities. Like container port terminal facilities, airport management is going global.

But there are also prior considerations that may kill off any Midway lease deal before the question of foreign leases on an American airport come up.

These are complicated financial deals and there are lots of reasons why they might be hard to pull off. Midway, like other publicly owned airports, gets substantial federal grants that might have to be refunded. There could be significant security concerns, such as those raised by the now—dead proposal for a firm owned by the United Arab Emirates to take command of operations at six major U.S. ports.

Hat tip: Ed Lasky

Thomas Lifson  3 13 06

The Chicago Tribune editorially endorses the effort underway by Mayor Daley to lease public facilities to private operators:

Mayor Richard Daley pulled off a coup in 2004 when a Spanish—Australian consortium agreed to pay $1.83 billion to lease and operate the Chicago Skyway into the next century. Now Daley is exploring a sequel. Maybe sequels. His administration is looking into leasing part or all of Midway airport to private business. City—owned harbors, parking lots and waste—sorting and transfer stations might also be ripe for leasing. Daley allies in Springfield are moving legislation to smooth such deals by making sure Midway and the other public facilities remain exempt from property taxes if private interests take over.

Notice that a foreign—owned company was involved in this transaction? In the realm of large scale enterprises like airports, private tollways, and many other civil engineering achievements, most of the experience is overseas.

Airports are an example. Widely admired airports have spun off consulting and even operating companies to run overseas airport facilities. Like container port terminal facilities, airport management is going global.

But there are also prior considerations that may kill off any Midway lease deal before the question of foreign leases on an American airport come up.

These are complicated financial deals and there are lots of reasons why they might be hard to pull off. Midway, like other publicly owned airports, gets substantial federal grants that might have to be refunded. There could be significant security concerns, such as those raised by the now—dead proposal for a firm owned by the United Arab Emirates to take command of operations at six major U.S. ports.

Hat tip: Ed Lasky

Thomas Lifson  3 13 06